The reconstituted Fiscal Incentives Review Board (FIRB) approved in 2021 the grant of tax incentives to five big-ticket projects with a combined investment capital of P119.5 billion, of which four are located outside Metro Manila.
Finance Assistant Secretary Juvy Danofrata, who heads the FIRB Secretariat, said that the five projects granted tax incentives by the FIRB were from the nine applications submitted by the Board of Investments (BOI) for approval.
One project was disapproved, leaving three more to be decided upon by the Board as of the end of 2021.
The rail operations of the proposed Makati City Subway was the only project located in Metro Manila that was approved for tax incentives. The rest are located in Iloilo, Davao, Batangas, and Pampanga, which involve cement manufacturing activities and the construction of mass housing units.
Danofrata said the FIRB Secretariat continues to hold town hall meetings and consultations with the various investment promotion agencies (IPAs) and publish e-newsletters, given that among the challenges that IPAs face is their limited awareness of the CREATE provisions, particularly on the grant of fiscal incentives and the details of the Strategic Investment Priority Plan (SIPP).
She mentioned that so far, the FIRB Secretariat had conducted three town hall meetings with IPA staff and published three e-newsletters to the IPAs about the CREATE Laws’ provisions.
Finance Secretary Carlos Dominguez III instructed Danofrata to hold a seminar as well with the heads of the various IPAs to provide them the information they need about the CREATE Law.
Last year, the FIRB Secretariat also launched the online system for incentives application known as the Fiscal Incentives Registration and Monitoring System (FIRMS). Moreover, instructional videos were uploaded on the FIRB website to guide both the IPAs and the RBEs in accessing and operating the features of FIRMS.
As of Feb. 14, 2022, only 45 FIRMS accounts were registered in the system, reflecting its low utilization rate, Danofrata said.
She said the FIRB would continue to encourage the use of the FIRMS among the prospective and existing business enterprises in the IPAs, as this system is crucial to facilitate the work of the Secretariat in monitoring the applications for tax incentives of IPA locators with investment amounts of below P1 billion.
In its report to Dominguez, the FIRB Secretariat said it also approved last year P4.28 billion in tax subsidies for seven government agencies and state-run corporations.
The recipients of the tax subsidies are the University of the Philippines-Baguio (UP-Baguio), Philippine Deposit Insurance Corp. (PDIC), Armed Forces of the Philippines Commissary and Exchange Service (AFPCES), Small Business Corp. (SBCorp), Government Service Insurance Corp (GSIS); Department of Interior and Local Government (DILG), and the Intercontinental Broadcasting Corp. (IBC-13); Finance Assistant Secretary Juvy Danofrata said in her report to Dominguez.
“Our efforts to enhance the country’s fiscal incentives system lead to attracting large amounts of investments from foreign investors, which in turn, will generate more employment opportunities and promote economic stability,” Danofrata said. She added that the FIRB’s grant of tax incentives is guided by the CREATE Act’s objective of establishing a performance-based, targeted, time-bound, and transparent corporate income tax system.
Under Republic Act (RA) No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, the grant of tax incentives to registered projects or activities with investment capital of P1 billion and below is delegated by the FIRB to the IPAs.
The FIRB is also given the discretion to increase this threshold amount.
Dominguez chairs the reconstituted FIRB with Department of Trade and Industry (DTI) Secretary Ramon Lopez as co-chairman.
After the CREATE law took effect on April 12 last year, Dominguez immediately called for a meeting of the FIRB, whose functions have been expanded to cover not only tax incentives given to government-owned or -controlled corporations (GOCCs), but also those granted by IPAs and other state-run agencies to their respective registered business enterprises (RBEs).